Friday, April 12, 2013

Don't Be Lazy. Create Value!

It's funny how cyclical the technology business is.  I guess that's not surprising since humans do tend to make the same mistakes over and over.  You would think that the rapid cycle time of our business would mean that folks haven't forgotten the old mistakes before making them again.  However, reality keeps proving me wrong again and again.

In this case, the failure is one of cost savings vs. value creation:

I cannot tell you how many times I have seen companies chase the cost savings rabbit down the customer rabbit hole.  In the end, this strategy almost never works.  Eventually, you have to go back to the actual reason why you are in business:  to create value for your customers.

I'm not trying to say that cost cutting doesn't work.  Clearly, it does.  Just look at Walmart.  However, we are not talking about retail here.  In the technology business, we are not operating in an efficient commodity marketplace.  The object of our game is to create customer value by delivering IP in the form of technology.  Retail transactions are about providing the exact same goods to the consumer.  You really can't innovate much there.  It's about price, convenience and service.  This is not the business that we are in.

Perhaps some day the pace of innovation in the IT marketplace will slow down to the point where we're basically all selling the same thing but we're not there yet.

In the meantime, you really need to be focused on value and the customer's perception of your product's value to them.  If you can do this successfully then you will do well overall.

I've discussed this topic in the blog before, but for those who are new to this blog, you really should check out Mahan Khalsa's book:  "Lets Get Real or Let's Not Play."  Highly recommended even if you're even marginally involved with talking to customers.  As a non-sales guy, it's easy to think of sales as sleazy or icky in that used care salesman kind of way.  And this is a sad thing.  The reality is that most sales people suck.  It's only when you're in the presence of a highly functional sales team that you realize how powerful it can be to transform your customer's lives.

If you take Khalsa's precepts to heart, then your function is always to seek the customers needs (as opposed to their stated desires or wants) and then to satisfy those needs.  If the customer relationship is focused on this very important transaction, it becomes a very positive experience for everyone.

Thus, short term strategies like selling based on a largely fictional TCO reduction don't really work.

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